Savings vs Investment: Understanding the Difference

Activity Description

In this hands-on worksheet activity, students will gain practical insights into the dynamics of savings and investments over varying timeframes. The primary objective is to understand how the same initial amount allocated to both savings and investments can perform differently based on the investment duration and to understand the risk involved in investments. There are three schemes that students will compare -

1. Savings scheme
2. Investment scheme that gives positive returns
3. Investment scheme that gives negative returns

Activity Steps:

1. The student will decide the amount of money and the decided money will be allocated for three schemes equally (one savings scheme and two investment schemes)
2. Students will select different investment durations using a slider (0 - 20 years)
3. For different durations given, students will analyze which scheme gives the best returns.

Key Takeaways:

Students will understand that savings schemes always give predictable returns and are of low risk, while investment schemes involve a risk that sometimes may give negative returns, but they are capable of giving multifold returns.

Learning Objective

Students will learn to differentiate between savings and investment options by comparing the performance of a steady savings scheme and two investment schemes with varying returns. Through this activity, students will analyze how different investment durations affect returns, recognize the potential risks and rewards associated with investments, and understand why long-term investments can outperform traditional savings despite short-term fluctuations.

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